Internet intercourse

 

What began last year as a few mutters (you read it in Ragtrader first) about the commercial impact of private internet imports has now become an avalanche. The heavyweights are on the case.

Gerry Harvey sees thousands of retail jobs being lost as well as emptying out prime retail space, while Bernie Brookes and Solly Lew have both made trips to Canberra with the aim of invoking some government action.

I can understand why Julia Gillard and company are ho-hum about this. The internet lurk is now so vast in Australia that to tax it with GST and duty would bring a voter revolt from a public that always wants the cheapest price no matter who it hurts.

When the crafty box of apparel arrives at the post office it may have been sniffed at for drugs but who has checked it for three other essentials: fibre content, country of origin and FairWear accreditation?

Consumer protection in Australia insists that every garment or item of footwear sold carries a content label. You know that if a shirt is 100 per cent polyester you will be rewarded with smelly armpits.

But some man-made microfibre yarns can imitate natural fibres in handle and appearance so well that you could be fooled into thinking they are cotton or silk, and then wonder why nobody will stand next to you on the train.

On a more sinister note, some fibres have been banned from kids’ nightwear because they are flammable. They could come into Australia via the internet and nobody would know until there was a tragedy.

Country of origin is important in marketing. Goods made in Italy or France are more highly valued than the identical goods made in Bangladesh or China. Yes, it’s illogical, but the customer rules, and will pay accordingly. Goods coming in as an internet import do not have to state country of origin, leaving them open to fraudulent labelling or no labelling at all.

The FairWear or no-sweat cause has done a lot towards stamping out sweatshops, not only in Australia but throughout the world. However, the system collapses when goods come in via internet sales. Who knows who made them, and who cares?

Bigger than Aida

While most people were laying in cold ones on New Year’s Eve, about 25 brave souls travelled to the Grace Hotel in the middle of Sydney for a decisive creditors’ meeting of the BEM Corporation, GTRAD and JTRAD – companies associated with the retail UTT Group (Under The Table). 

These stores, which once ran to 70 nationally, are now down to around 30 and, to use a familiar term, have gone mahulla. They are mostly located in Direct Factory Outlet and similar centres that specialise in low cost clearance lines (or goods giving that impression) covering apparel, accessories and shoes.

If this were an opera it would rival Aida. The creditors, owed around $23 million ($16 million unsecured), are only a small part of the cast. 

There are associated companies that peel back like lettuce leaves; there are bitter run-ins between directors and management; there is a trio of advisors sitting in an ineffective panel, and there is a large orchestra of employees including buyers and sundry assistants who have a doubtful future.

The lead singers are Warwick Susskind (director), Geoffrey Susskind (director and incredible lender to the company), Peter Preston (biggest garment supply creditor, lender and former managing director of Sussan), Frank DeRango (MD of DFO and another incredible lender), Jonathan Baral (founder and the former MD of the company, now singing from the wings since he was bought out) and an auxiliary choir of scurrying lawyers and accountants headed by the aptly named administrator Adam Shepard. 

This meeting was not only for those attending in body but also those whose voices were patched in via a teleconferencing loudspeaker sitting at the high table.

One voice (body in Queensland) continually interrupted proceedings with cross-examinations of the parties, especially poor Adam, who showed signs of exasperation when the vote had to go to a poll – which involved counting the zillions of proxy votes.

The Voice had moved that the meeting be adjourned to allow more time to look under rocks. Although the meeting singers agreed with his robust aria, the proxies bowled him middle stump.

The New Year’s Eve performance finally  reached a last act agreement with creditors that the company enter into a deed of company arrangement so that it could trade on (under the management of Peter Preston, big tick) ) and pay out its commitments – which are too numerous to list here.

According to the deed, unsecured creditors will get five cents in the dollar over an 18-month period and those secured or with charges over the businesses may get their money back one day. Employees will get their full entitlements and the tax man may eventually get his money too.

The alternative, to put the group into liquidation, would suit nobody except those wanting to see blood let for the sake of it. 

This summary does not nearly do justice to the entire opera, the libretto of which is set down in the administrator’s admirably extensive and detailed reports.

The creditors, owed $23 million, are only a small part of the cast. There are associated companies that peel back like lettuce leaves.